Chile 9M'21 Earnings Presentation - 27 October 2021 - Banco Santander
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27 October 2021 Chile 9M’21 Earnings Presentation
Important Information
Non-IFRS and alternative performance measures
This presentation contains, in addition to the financial information prepared in accordance with International Financial Reporting Standards (“IFRS”) and derived from our financial statements, alternative
performance measures (“APMs”) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority (ESMA) on 5 October 2015
(ESMA/2015/1415en) and other non-IFRS measures (“Non-IFRS Measures”). These financial measures that qualify as APMs and non-IFRS measures have been calculated with information from
Santander Group; however those financial measures are not defined or detailed in the applicable financial reporting framework nor have been audited or reviewed by our auditors. We use these APMs
and non-IFRS measures when planning, monitoring and evaluating our performance. We consider these APMs and non-IFRS measures to be useful metrics for our management and investors to compare
operating performance between accounting periods, as these measures exclude items outside the ordinary course performance of our business, which are grouped in the “management adjustment” line
and are further detailed in Section 3.2 of the Economic and Financial Review in our Directors’ Report included in our Annual Report on Form 20-F for the year ended 31 December 2020. Nonetheless, these
APMs and non-IFRS measures should be considered supplemental information to, and are not meant to substitute IFRS measures. Furthermore, companies in our industry and others may calculate or use
APMs and non-IFRS measures differently, thus making them less useful for comparison purposes. For further details on APMs and Non-IFRS Measures, including its definition or a reconciliation between
any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFRS, please see the 2020 Annual Report on Form 20-F filed with the U.S.
Securities and Exchange Commission (the “SEC”) on 26 February 2021, as updated by the Form 6-K filed with the SEC on 14 April 2021 in order to reflect our new organizational and reporting structure,
as well as the section “Alternative performance measures” of the annex to the Banco Santander, S.A. (“Santander”) Q3 2021 Financial Report, published as Inside Information on 27 October 2021. These
documents are available on Santander’s website (www.santander.com). Underlying measures, which are included in this presentation, are non-IFRS measures.
The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable
accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such
subsidiaries.
Forward-looking statements
Santander advises that this presentation contains “forward-looking statements” as per the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by
words like “expect”, “project”, “anticipate”, “should”, “intend”, “probability”, “risk”, “VaR”, “RoRAC”, “RoRWA”, “TNAV”, “target”, “goal”, “objective”, “estimate”, “future” and similar expressions. Found
throughout this presentation, they include (but are not limited to) statements on our future business development, economic performance and shareholder remuneration policy. However, a number of
risks, uncertainties and other important factors may cause actual developments and results to differ materially from our expectations. The following important factors, in addition to others discussed
elsewhere in this presentation, could affect our future results and could cause materially different outcomes from those anticipated in forward-looking statements: (1) general economic or industry
conditions of areas where we have significant operations or investments (such as a worse economic environment; higher volatility in the capital markets; inflation or deflation; changes in demographics,
consumer spending, investment or saving habits; and the effects of the COVID-19 pandemic in the global economy); (2) exposure to various market risks (particularly interest rate risk, foreign exchange
rate risk, equity price risk and risks associated with the replacement of benchmark indices); (3) potential losses from early repayments on our loan and investment portfolio, declines in value of collateral
securing our loan portfolio, and counterparty risk; (4) political stability in Spain, the United Kingdom, other European countries, Latin America and the US (5) changes in legislation, regulations, taxes,
including regulatory capital and liquidity requirements, especially in view of the UK exit of the European Union and increased regulation in response to financial crisis; (6) our ability to integrate
successfully our acquisitions and related challenges that result from the inherent diversion of management’s focus and resources from other strategic opportunities and operational matters; and (7)
changes in our access to liquidity and funding on acceptable terms, in particular if resulting from credit spreads shifts or downgrade in credit ratings for the entire group or significant subsidiaries.
2
Important Information
Numerous factors could affect our future results and could cause those results deviating from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause
actual results to differ materially from those in the forward-looking statements.
Forward-looking statements speak only as of the date of this presentation and are informed by the knowledge, information and views available on such date. Santander is not required to update or
revise any forward-looking statements, regardless of new information, future events or otherwise.
No offer
The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document
published by Santander. Any person at any time acquiring securities must do so only on the basis of such person’s own judgment as to the merits or the suitability of the securities for its purpose and only
on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the
information contained in this presentation. No investment activity should be undertaken on the basis of the information contained in this presentation. In making this presentation available Santander
gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever.
Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United
States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation or
inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000.
Historical performance is not indicative of future results
Statements about historical performance or accretion must not be construed to indicate that future performance, share price or future (including earnings per share) in any future period will necessarily
match or exceed those of any prior period. Nothing in this presentation should be taken as a profit forecast.
profit forecast.
Third Party Information
In particular, regarding the data provided by third parties, neither Santander, nor any of its administrators, directors or employees, either explicitly or implicitly, guarantees that these contents are exact,
accurate, comprehensive or complete, nor are they obliged to keep them updated, nor to correct them in the case that any deficiency, error or omission were to be detected. Moreover, in reproducing
these contents by any means, Santander may introduce any changes it deems suitable, may omit partially or completely any of the elements of this document, and in case of any deviation between such
a version and this one, Santander assumes no liability for any discrepancy.
3
Index
1 2 3 4 5
Financial Strategy and Results Concluding Appendix
system business remarks
4Financial system
Loan growth stabilizing after strong commercial demand in previous quarters.
Liquidity in the system remains high
Total loans (Constant EUR bn1) After strong levels of commercial loan growth in 2020, due to the
state-guaranteed loans available for SMEs, commercial lending has
remained flat.
206 203 206 209 214
Mortgages continued to grow steadily due to relatively low interest
7.3% rates and high liquidity of our clients.
2.8% 0.2% 4.0%
YoY 0.4%
(%) Consumer lending in the system started to rise, with growth in credit
cards. However, lending remains subdued due to the liquidity from
the three pension fund withdrawals.
NPL ratios remained stable in the system, with lower provisioning
Sep-20 Dec-20 Mar-21 Jun-21 Aug-21 during the period with banks maintaining high coverage levels.
Total customer funds (Constant EUR bn1,2)
218 221
207 206 209
High liquidity levels continued with the third round of pension fund
withdrawals as well as further social aids from the government.
12.0% Currently a fourth withdrawal from the pension funds is being
YoY 8.7% debated and this could extend the liquidity further.
5.0% 7.1%
(%) 2.7%
The Monetary Policy Rate was raised to 1.5% in September with a
further increase to 2.75% in October due to the higher inflation.
Sep-20 Dec-20 Mar-21 Jun-21 Aug-21
(1) End period exchange rate as at Aug-21 5
(2) Include demand deposits, time deposits and mutual fundsIndex
1 2 3 4 5
Financial Strategy and Results Concluding Appendix
system business remarks
6Strategy and business
Santander Chile is the nation’s leading bank
KEY DATA 9M’21 YoY Var.4 STRATEGIC PRIORITIES
Customer loans1 EUR 38.9 bn +0.5%
Customer funds2 EUR 40.2 bn +17.1% Maintain high customer satisfaction
levels, increase the productivity of all
Underlying att. Profit EUR 463 mn +68.5% channels and improve efficiency and
profitability
Underlying RoTE 18.5% +7.5 pp
Transform the Bank into a platform that
Efficiency ratio 38.7% -210 bps customers can use as a channel or
software provider to develop their
Loans market share3 18.2% -20 bps businesses (ex. Workcafé Community,
Getnet)
Deposits market share 3 19.1% +117 bps
Loyal customers 807 k +11.0% Focus on mass market through Santander
Life, Superdigital and Klare, our open
+29.9%
platform insurance broker
Digital customers 1,934 k
Branches 332 -6.2%
Employees 10,570 -5.6%
(1) Gross loans excluding reverse repos
(2) Excluding repos
7
(3) As of June 2021
(4) Constant eurosStrategy and business
Strong increase in digital and mobile customers. 1st in NPS in customer satisfaction
driven by better quality of service and digital offering
Loyal customers (k)
11% 807
727
Loyal middle-income customers rose 15% year-on-year due to higher customer attraction
through our digital products, increasing current accounts by 69%
We are #1 in NPS according to the latest market survey by Activa
Sep-20 Sep-21
Loyal / Active: 41% (-4 pp YoY)
Digital customers (k)
30% Digital customers continued to grow strongly
1,934
1,489 Mobile customers rose 31% YoY
Digital framework: delivering efficiency and broadening the product range in digital
channels. The Life programme and Superdigital continued to grow strongly, expanding our
Sep-20 Sep-21
customer base through digital transactionality
Digital sales / total1: 43% (+3 pp YoY)
(1) YTD data 8Strategy and business
Our digital offering continued to attract record new customers despite lockdowns
Initiative Progress
Acquiring network that uses a four-part model to operate,
Fully launched in April 2020, >208,000 offering a payment solution to businesses
active customers
Instant payments
Cards & Getnet was officially rolled out in Customers will be able to receive money from their
February 2021, with >46 k PoS sold, of sales in a Santander account up to five times in one
Acquiring
which 94% were sold to SMEs day, including holidays.
More than 797,000 customers, including Different plans for different clients
639,000 Cuenta Life customers Fixed or mobile PoS, both of which include an incorporated SIM
card. Rebates for integrated plans with Santander, and insurance
for “Protected Billing”.
Selling life, sports, health and dental
insurance with 48 k visits per month No more “Credit or debit?”
Cardholders will no longer need to answer what type of card they
want to use, as the PoS will automatically detect it, making the
shopping experience more seamless.
All of which are supported by Accepts all cards, with the
our WorkCafé Community following brands:
9Strategy and business
Further embedding ESG to build a more responsible bank
Environmental: Social: building a Governance: doing
supporting the more inclusive business the right
green transition society way
Helping customers go green Talented & diverse team A strong culture
EUR 15.7 bn1 EUR 120 mn2 #14 company to 26% women in Simple, Personal, Fair
Green Finance AuM Social Responsible work for leadership positions
since 2019 Investment
Financially empowering people5 Taking ESG criteria into account
when determining remuneration
EUR 130 mn
Carbon Neutral
Social Women
in our own c. 1.4 mn people since 2019
SME Bonds issued
operations
An independent, diverse Board
in 9M’21
>64% Independent directors
Supporting society5 22% women on Board
Aligning to International standards
246 k people 4.6 k scholarships Governance embedded to deliver on
1st SASB3 report helped since 2019 granted since 2019 ESG
Note: 9M’21 provisional data. Not audited
(1) Includes ESG loans, green and sustainable bonds, project finance with ESG impact, up to Sep-21
(2) Through Santander Go Global Stocks Fund, as of Sep-21 10
(3) Sustainability Accounting Standards Board
(4) Great Place to Work, for companies over 1,000 employees. 2020
(5) Up to Sep-21Strategy and business
Loans remained virtually flat YoY, as growth in mortgages offset the fall in corporates
and CIB. QoQ increase underpinned by mortgages and corporates loans
Total customer loans (Constant EUR bn)1
Sep-21 Sep-20 YoY (%) QoQ (%)
38.7 38.9
37.6 37.7 37.7 Individuals
2
20.8 19.7 5.8 2.1
o/w Mortgages 15.4 14.0 10.1 3.0
o/w Cards & Consumer
4.1 4.3 -4.8 0.1
credit
Consumer Finance 0.8 0.5 0.0 0.0
SMEs 5.1 5.2 -2.7 -2.4
Corporates & Institutions 8.9 9.3 -4.3 2.7
CIB 2.9 3.4 -13.4 28.9
Other 0.4 0.6 -37.4 -22.6
Total customer loans 38.9 38.7 0.5 3.2
Sep-20 Dec-20 Mar-21 Jun-21 Sep-21
Group criteria
(1) Excludes reverse repos. End period exchange rate as at Sep-21 11
(2) Includes Private BankingStrategy and business
Customer funds were 17% YoY higher, mainly boosted by demand deposits. In Q3, a
change in funding mix resulting from higher rates led to a 10% rise in time deposits
Total customer funds (Constant EUR bn)1
40.2 Sep-21 Sep-20 YoY (%) QoQ (%)
38.8
Demand 18.4 14.7 24.9 -1.4
35.1 35.5
34.3 Time 13.1 11.6 12.8 10.3
Total deposits 31.5 26.3 19.6 3.1
Mutual Funds 8.7 8.0 9.1 4.8
Total customer funds 40.2 34.3 17.1 3.5
Sep-20 Dec-20 Mar-21 Jun-21 Sep-21
Group criteria 12
(1) Excluding repos. End period exchange rate as at Sep-21Index
1 2 3 4 5
Financial Strategy and Results Concluding Appendix
system business remarks
13Results
Growth in NII YoY boosted by increased mortgage volumes, higher inflation and
margin management. QoQ NII drop impacted by higher funding costs
Net interest income (Constant EUR mn)1 Yields and Costs (%)
508 492 501 483 7.03% 6.93% 6.99%
435 6.67%
Yield on loans
4.75%
Cost of deposits
0.34% 0.45% 0.35% 0.31% 0.41%
Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21
NIM2 Differential
2.47% 3.05% 3.02% 3.01% 2.74% 4.4 pp 6.6 pp 6.6 pp 6.4 pp 6.6 pp
Central Banks ST rate3
0.50% 0.50% 0.50% 0.50% 1.50%
Inflation rate4
0.0% 1.3% 1.1% 1.1% 1.3%
(1) Average exchange rate as at 9M'21 14
(2) Group criteria
(3) Quarter-end
(4) Unidad de Fomento quarter-end variationResults
Net fee income increased 20% YoY and 14% QoQ, boosted by higher transactional,
investment & pension funds and insurance fees
Net fee income (Constant EUR mn)1 9M'21 9M'20 YoY (%) QoQ (%)
Transactional fees 174 150 16.1 13.5
107 Payment methods 89 66 34.2 15.8
Transfers, drafts, cheques
22 18 17.2 11.6
97 and other orders
94 94 Account admin + Packs
35 32 8.6 6.5
plans
Other transactional 28 33 -13.6 17.1
76 Investment and pension
55 53 4.3 10.6
funds
Insurance 44 35 28.7 0.8
Securitites and custody
9 10 -8.2 -14.6
services
Other 12 (2) - -
Total net fee income 294 245 20.0 14.0
Q3'20 Q4'20 Q1'21 Q2'21 Q3'21
(1) Average exchange rate as at 9M'21 15Results
Total income up 8% YoY driven by NII and strong growth in net fee income, offsetting
lower gains on financial transactions
Total income (Constant EUR mn)1
610 608 624
603
551
9M'21 9M'20 YoY (%) QoQ (%)
Net interest income 1,476 1,320 11.8 -3.5
Net fee income 294 245 20.0 14.0
Customer revenue 1,770 1,566 13.1 -0.8
Other2 64 139 -53.6 -57.5
Total income 1,834 1,704 7.6 -3.5
Q3'20 Q4'20 Q1'21 Q2'21 Q3'21
(1) Average exchange rate as at 9M'21 16
(2) Other includes Gains (losses) on financial transactions and Other operating incomeResults
Costs rose 2% YoY (below inflation) and decreased 2% QoQ, through efficient cost
management
Operating expenses (Constant EUR mn)1
240
236
233
230
9M'21 9M'20 YoY (%) QoQ (%)
225
Operating Expenses 710 695 2.1 -1.6
Branches (#) 332 354 -6.2 0.0
Employees (#) 10,570 11,200 -5.6 -0.5
Q3'20 Q4'20 Q1'21 Q2'21 Q3'21
(1) Average exchange rate as at 9M'21 17Results
Positive YoY revenue performance and cost control efforts were reflected in net
operating income and efficiency improvement
Net Operating Income (Constant EUR mn)1
385 374 384
366 9M'21 9M'20 YoY (%) QoQ (%)
321 Total income 1,834 1,704 7.6 -3.5
Operating Expenses (710) (695) 2.1 -1.6
Net operating income 1,125 1,009 11.5 -4.7
Efficiency ratio 38.7% 40.8% -210 bps
Q3'20 Q4'20 Q1'21 Q2'21 Q3'21
(1) Average exchange rate as at 9M'21 18Results
LLPs dropped 48% YoY mainly due to covid-19 related charges in 2020. Credit quality
indicators improved YoY and QoQ
Net LLPs (Constant EUR mn)1
9M'21 9M'20 YoY (%) QoQ (%)
159
Net operating income 1,125 1,009 11.5 -4.7
Loan-loss provisions (266) (510) -48.0 8.5
97 99 Net operating income after
87 859 499 72.3 -8.1
80 provisions
NPL ratio 4.36% 4.76% -40 bps -20 bps
Cost of credit2 0.89% 1.59% -69 bps -18 bps
Coverage ratio 64% 60% 4.4 pp 0.3 pp
Q3'20 Q4'20 Q1'21 Q2'21 Q3'21
(1) Average exchange rate as at 9M'21 19
(2) Cost of credit based on 12 month loan-loss provisions divided by average customer loansResults
Underlying attributable profit surged 68% due to lower LLPs and positive revenue
performance
Underlying Attributable Profit (Constant EUR mn)1
9M'21 9M'20 YoY (%) QoQ (%)
167 165
PBT 857 510 67.9 -11.1
151 147 Tax on profit (183) (109) 67.9 -11.1
Consolidated profit 674 401 68.0 -11.2
Minority interests (211) (126) 66.9 -11.5
Underlying attributable
463 275 68.5 -11.0
89 profit
Effective tax rate 21.4% 21.4% 0.0 pp
Q3'20 Q4'20 Q1'21 Q2'21 Q3'21
(1) Average exchange rate as at 9M'21 20Index
1 2 3 4 5
Financial Strategy and Results Concluding Appendix
system business remarks
21Concluding remarks
Concluding remarks
Loan growth stabilizing after strong commercial demand in previous quarters.
The Monetary Policy Rate was raised to 1.5% in September with a further increase to 2.75% in October, due to higher
Financial System inflation.
NPL ratios remained stable in the system and lower provisions during the period.
High liquidity levels continued in the third quarter of the year.
Life and Superdigital are showing solid growth, helping increase the customer base in these segments while
containing risk.
Strategy With the focus on digital banking, our customers are using our digital channels more and we reached #1 in NPS.
&
Business Loans remained flat, as growth mortgages offset the fall in corporates and CIB.
Customer funds were 17% YoY higher, mainly boosted by demand deposits. In the quarter, the change in the funding
mix due to higher rates led to a 10% rise in time deposits.
Total income up 8% YoY driven by NII and strong growth in net fee income, offsetting lower gains on financial transactions.
Costs rose below inflation through efficient cost management. The efficiency ratio improved 210 bps YoY to 38.7%.
Results
LLPs dropped YoY with credit quality indicators improving.
Underlying attributable profit surged 68% YoY due to lower LLPs and the positive revenue performance.
22Index
1 2 3 4 5
Financial Strategy and Results Concluding Appendix
system business remarks
23Appendix
Balance sheet
1
Constant EUR million Variation
Sep-21 Sep-20 Amount %
Loans and advances to customers 37,851 37,700 151 0.4
Cash, central banks and credit institutions 9,573 6,401 3,171 49.5
Debt instruments 9,682 6,501 3,180 48.9
Other financial assets 9,901 10,562 (662) (6.3)
Other asset accounts 3,011 2,977 34 1.2
Total assets 70,017 64,142 5,876 9.2
Customer deposits 31,509 26,373 5,136 19.5
Central banks and credit institutions 12,903 12,310 593 4.8
Marketable debt securities 8,323 8,405 (82) (1.0)
Other financial liabilities 10,683 11,230 (547) (4.9)
Other liabilities accounts 2,230 1,236 994 80.4
Total liabilities 65,648 59,554 6,093 10.2
Total equity 4,370 4,587 (218) (4.7)
Other managed customer funds 10,400 9,661 739 7.7
Mutual funds 8,684 7,958 726 9.1
Pension funds — — — —
Managed portfolios 1,716 1,702 14 0.8
(1) End of period exchange rate as at Sep-21 24Appendix
Income statement
1
Constant EUR million Variation
9M'21 9M'20 Amount %
Net interest income 1,476 1,320 155 11.8
Net fee income 294 245 49 20.0
Gains (losses) on financial transactions 110 159 (49) (31.0)
Other operating income (45) (20) (25) 126.0
Total income 1,834 1,704 130 7.6
Operating expenses (710) (695) (14) 2.1
Net operating income 1,125 1,009 116 11.5
Net loan-loss provisions (266) (510) 245 (48.0)
Other gains (losses) and provisions (2) 12 (14) —
Underlying profit before tax 857 510 347 67.9
Tax on profit (183) (109) (74) 67.9
Underlying profit from continuing operations 674 401 273 68.0
Net profit from discontinued operations — — — —
Underlying consolidated profit 674 401 273 68.0
Non-controlling interests (211) (126) (84) 66.9
Underlying attributable profit to the parent 463 275 188 68.5
(1) Average exchange rate as at 9M’21 25Appendix
Quarterly income statement
1
Constant EUR million
Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21
Net interest income 450 435 435 508 492 501 483
Net fee income 93 76 76 97 94 94 107
Gains (losses) on financial transactions 13 93 52 19 32 47 30
Other operating income (1) (6) (13) (13) (10) (18) (18)
Total income 555 598 551 610 608 624 603
Operating expenses (232) (234) (230) (225) (233) (240) (236)
Net operating income 324 365 321 385 374 384 366
Net loan-loss provisions (164) (187) (159) (97) (99) (80) (87)
Other gains (losses) and provisions 1 (2) 13 4 (1) 5 (5)
Underlying profit before tax 160 175 175 292 274 309 274
Tax on profit (21) (43) (45) (50) (54) (68) (61)
Underlying profit from continuing operations 139 132 130 242 219 241 214
Net profit from discontinued operations — — — — — — —
Underlying consolidated profit 139 132 130 242 219 241 214
Non-controlling interests (42) (44) (41) (75) (69) (75) (67)
Underlying attributable profit to the parent 98 88 89 167 151 165 147
(1) Average exchange rate as at 9M’21 26Thank You. Our purpose is to help people and businesses prosper. Our culture is based on believing that everything we do should be:
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